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The Theresa May government’s nuclear obsession is a betrayal of democracy

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Theresa May’s party made a commitment to delivering the lowest cost power in Europe. The Conservatives also promised utter impartiality in deciding between power generation technologies. So how can it now justify a pro-nuclear energy policy that could cost each household £12,600? OLIVER TICKELL investigates.

It seems like a long time ago now: the Conservative party’s catastrophic 2017 election manifesto. Yes, the one that promised a new care home tax on the elderly, and an end to the pensioners’ winter fuel allowance. And that went on to turn Teresa May’s repeated mantra of ‘strong and stable’ government into hubris of the first order as she lost her overall majority in Parliament.

But not everything in the manifesto was a disaster. Indeed it contained one excellent policy – on energy. Remarkably – given the long-standing Tory obsession with nuclear power – the word ‘nuclear’ did not appear once in the entire document.

Solar auction

Instead the manifesto insists that a future Tory government would remain utterly indifferent to how electricity is generated, so long as it’s reliable, cheap and low carbon. “Above all, we believe that energy policy should be focused on outcomes rather than the means by which we reach our objectives,” it read.

“So, after we have left the European Union, we will form our energy policy based not on the way energy is generated but on the ends we desire – reliable and affordable energy, seizing the industrial opportunity that new technology presents and meeting our global commitments on climate change …

“We want to make sure that the cost of energy in Britain is internationally competitive, both for businesses and households … Our ambition is that the UK should have the lowest energy costs in Europe, both for households and businesses. So as we upgrade our energy infrastructure, we will do it in an affordable way, consistent with that ambition.”

This sounded good to the green brigade because renewable energy prices, in the UK and elsewhere, have been hitting new lows. In a September 2017 contract auction, two offshore wind projects came in at a record low price of £57.50 / megawatt hour (MWh).

Onshore wind costs even less: contracts awarded in Germany in May went as low as €42.80 / MWh (£38.24) – less than the UK’s wholesale power market price. And in October, Germany’s solar auction delivered bids as low as €42.90 / MWh – just a few pence higher than onshore wind.

Reactor designs

It is also clear that new nuclear plants are an incredibly costly way of generating power. Hinkley C, now under construction at Hinkley Point in Somerset, is set to receive a guaranteed £92.50 / MWh, for 35 years. That’s in 2013 money, so is now worth around £100.

With current wholesale power prices around £40-45 per MWh, that’s one hell of a deal for its developers, France’s EDF and its Chinese partner, CGN. But even at this price, many analysts think EDF should walk away from the project, such are its technical and financial risks.

So now we have power from onshore wind, solar and offshore wind all much cheaper than new nuclear. So we can safely assume that the UK government has seen the writing on the wall and dumped hyper-costly nuclear power in favour of increasingly low-cost renewables, can’t we?

No: its nuclear obsession continues unabated. The Tories’ election manifesto – which some old-fashioned ‘my word is my bond’ types might view as part of a binding covenant between government and electorate – is clearly only so much chip paper to the incumbent technocrats.

Instead, we see a renewed determination to press ahead with massive nuclear power construction no matter what the cost. In addition to the twin EPR’s at Hinkley Point C, the government is pushing ahead with plans to build reactors at Moorside in Cumbria, at Wylfa on Anglesey, at Bradwell on the Essex coast, at Oldfield in Gloucestershire, at Sizewell on the Suffolk coast – employing surprisingly diverse reactor designs.

Design Enhancements

These include the Westinghouse’s AP1000, Hitachi’s Advanced Boiling Water Reactor (ABWR), China General Nuclear’s Hualong HPR1000, and South Korean group Kepco’s APR1400.

In total, the government wants to procure 19GW of new nuclear power, much of it to be operational by 2030 as the UK prepares to close some 10 gigawatts (GW = 1,000 MW) of existing nuclear capacity. But that’s not the limit of its nuclear ambitions.

Business Secretary Greg Clarke recently announced that the winner of a competion for a new generation of ‘small modular reactors’ (SMRs), an industrial consortium led by Rolls Royce, will receive an initial £100 million from taxpayers to progress its project to design and manufacture reactors around a tenth the size of the 1.2GW behemoths to be deployed at Hinkley Point.

The idea is that these SMRs will be built by the hundreds on production lines, and installed in urban fringes across the UK, achieving ‘process engineering’ improvements and enormous economies of scale. But the policy suggests the triumph of hope over experience.

The first SMRs were built in the 1950 and hundreds have been installed in nuclear powered submarines and other ships since. If there were huge cost savings available from design enhancements and production-line construction, why have the last 65 years of nuclear engineering enhancements failed to deliver them already?

New Nuclear

The truth is that nuclear reactors have got ever bigger for a very simple reason – that it’s cheaper that way, a fact recently confirmed in a July 2016 analysis by Atkins consultants for Clarke’s BEIS Department which revealed that the first SMRs would probably cost 30 percent more to build than existing large nuclear designs.

Only after 5-8 GW – that’s 50 – 80 100 MW units – had been deployed might the price finally be competitive with the large reactor designs that are already way too expensive. “SMRs could become cost competitive against large nuclear after 5-8 GWe of global deployment of a single design”, states the report.

The report goes on to estimate a ‘net present value’ (NPV) of a 2 GW UK SMR programme, compared to large nuclear, of minus £4.8 billion – indicating a likely thumping loss of taxpayers funds. And even that strongly negative assessment depends on generating improbably high SMR exports of 300MW to 750MW per year.

The same volume of offshore wind – even based on 2015/16 prices of around £100 / MWh, almost double the lowest achieved in 2017 – delivered a plus £400 million NPV.

So what’s the likely bill to tax payers and energy users of all this new nuclear power? Assuming an average 2030 wholesale power price (constrained by zero marginal cost wind and solar) at roughly today’s level of £40, an average nuclear power price of £100 (both in today’s money), new nuclear will need a subsidy of £60 / MWh.

Jobs and Pensions

Assuming the nuclear plants work flat out for 90% of the time, 19GW will deliver 150 million MWh of power per year, earning £9 billion in support payments. Split over Britain’s 25 million homes, that comes to about £360 extra on energy bills each per year.

Assuming 35 year contracts for nuclear (as at Hinkley C) rather than the 15 year contracts given to most renewables generators, the bill comes to a total £315 billion ‘nuclear tax’ to be paid by British power users. That’s a massive £12,600 per household.

So here’s the key question: how can a government that has declared in its election manifesto its commitment to delivering the lowest cost power in Europe, and its utter impartiality in deciding between any one power generation technology over any other, justify an obsessively pro-nuclear energy policy that could land every household in Britain with a £12,600 ‘nuclear tax’?

No less pertinent a question is: where is the political opposition to this nuclear madness? Despite a stinging critique of Hinkley C from the House of Commons Public Accounts Committee last month, The Labour party and its leader Jeremy Corbyn have been notably silent on the issue, apparently under the influence of the big nuclear sector unions, GMB and Unite.

But at least that’s consistent with its manifesto statement, which states that: “The UK has the world’s oldest nuclear industry, and nuclear will continue to be part of the UK energy supply. We will support further nuclear projects and protect nuclear workers’ jobs and pensions. There are considerable opportunities for nuclear power and decommissioning both internationally and domestically.”

Democratic Process

The LibDems, who were strongly against nuclear power until they joined the Tories in coalition government in 2010, were then hugely for it in office. Now it appears the party has turned against it again.

Its manifesto promised to “accept that new nuclear power stations can play a role in electricity supply provided concerns about safety, disposal of waste and cost are adequately addressed, new technology is incorporated, and there is no public subsidy for new build.”

And since the public subsidies are enormous, that means the LibDems should be fiercely opposing the government’s plans. But – with the recent exception of former energy secretary Ed Davey MP, talking good sense this week on Greenpeace’s Unearthed – they too are keeping quiet about the monstrous subsidies the Tories are ready to throw at nuclear power.

This leaves the UK is now suffering something arguably even worse than a disastrously ill-judged energy policy: a total failure of democratic process and governance that will cost us this country dear for half a century or more to come.

If nuclear was a way to make money, British Nuclear Fuel Ltd would not have been broken up. Even with this country’s obsession with nuclear, they still couldn’t make it pay.
The good news is that estimates for decommissioning Dounray is down from £2.9 billion to £2.6 billion.
Apparently the best place to store nuclear waste underground is chalk based – as in Oxfordshire.

Oliver Tickell again, making the same point he’s been making for about a year now that he feels personally betrayed by the Tories’ failure to live up to an implied anti-nuclear commitment in their manifesto’s failure to mention nuclear. (A commitment as Tickell but apparently no-one else sees it). Cue the world’s smallest violin.

Well, first of all, why did Tickell feel this evident tender faith in the Tory party? Well, one reason perhaps is – if I remember correctly – that his Dad was Thatcher’s ambassador to the UN, and who some claim induced the Iron Bitch to make some very profound noises at the UN about the threat of global warming back in the day, as everyone forgets she did, long before it was fashionable to do so.. But putting that to one side, let’s engage with his arguments. Which are, as usual, predicated on a typical, middle class, liberal/corporate green agenda couched in the culturally conformist and actually quite reactionary, not to mention anti-scientific dogma of 100% renewables.

First of all, the 57.50/MWh strike price agreed in September for offshore wind was the greatest bit of relief the renewables lobby and corporate/mainstream greenery have had in years. Yet if you actually scan the CfD statistics, it becomes clear this drastic cost cut is just for two projects. The vast majority of offshore wind CfDs are still set at 120/MWh. There’s no evidence this 50% discount per MWh can be replicated at scales of hundreds of GWh’s, which is what it would take to decarbonize the UK.

(Remember: you have to overbuild intermittent renewables to ensure sufficient supply of energy when the wind isn’t blowing strongly, and then a surplus on top of that to go into storage when it isn’t blowing at all).

But Tickell simply ignores the storage-intermittency problem, which hasn’t gone away. Nor will it go away. just because a PR campaign has been mounted since COP21 2015, to weave a basket of lies around telling the world that when the wind isn’t blowing or the sun isn’t shining, entire economies can run off of lithium ion batteries (which are just standard consumer electronic batteries).

Late last year a prominent German economist found that physical (not economic) limitations of renewables, mainly relating to storage, meant that wind and solar would never achieve more than 61% grid penetration in Germany. Nor is this a fringe conclusion from some wrinkly climate denier; previous estimates have been in the ballpark of 40%, barring a revolution in energy storage. This new study included the assumption of using interconnectors to Norwegian hydro f0r balancing. Which is a chimera the Scottish, Danish, Swedish (etc.) governments — all in thrall to 100% renewables hype — are also “looking at”. (Which, of course, means that, worse, they all intend to play a zero sum, but enormously expensive, interconnector-building game with that finite resource.)

Admittedly Hinkley C is too expensive. But why is it too expensive? Well basically, the policy achievements of “environmentalists” in the last 30+ years can be summarized as: “making nuclear expensive while putting across the PR line that all they’re doing is making renewables cheap”.

(And let’s be brutally honest, *absolutely sod all* has been achieved towards sensible objectives mainstream environments do have, or at least used to have, like reducing private car use and encouraging cycling and public transport. Why? Well, because you can’t earn 350,000 a year and get invited to fly off to conferences as head of Greenpeace by talking about bike paths. Leave that to the loser local campaigners..).

To take the UK case: the last nuclear plant the UK did, Sizewell B, took 7 years to build (88-95) and if commissioned today would have a CfD of about 60/MWh. Since it doesn’t imply any storage or gas backup requirement, obviously Sizewell B was better value than Hornsea or Moray offshore wind at 57/MWh. So why does Hinkley C cost about 40% more?

Well, first of all the financing is at private sector borrowing rates. Prof Dieter Helm, energy economist at Oxford, estimates that roughly half Hinkley’s cost is just due to that. Saying we shouldn’t build nuclear because of the cost of private financing is like saying we shouldn’t build schools and hospitals because of PFI. Those too are capital intensive public investments, and also as baseload power plants are, unlike wind turbines, completely essential. (Without a reliable power supply, a hospital is useless except as a way to sporadically kill patients.)

Those financial arrangements are a consequence of political dithering leading to a weak negotiating position and ultimately a bad financing deal with the Chinese. A strategic mistake caused by environmental NGOs obstruction. They prodded and seduced Blair in the mid-2000s to go with his populist and neoliberal instincts — to build “sexy” renewables and not borrow — a “carrot”; all while threatening PR-whore Blair with the “stick” of bad PR, of the kind Greenpeace illustrated when they ran a TV spot in 2006 showing a 9/11 style attack on a British nuclear plant. (Even though the nuclear plant in question had been hardened to aircraft crashes, as per regulation. Classic black propaganda.)

So, the NGOs fought a dirty war. But the shame goes deeper. Hinkley C’s EPR reactor is ludicrously safety overspecified and convervatively designed. It’s no coincidence that the EPR was a German design — originally the early 80s Siemens-Konvoi. In other words, rather than an efficient tool to fight climate change, it was designed to be sold to a public for whom radiophobia is literally a national past time. Another intended albeit indirect effect of the same propaganda.

Massive investment in anything brings down costs through learning, standardization, development of supply chains and skills bases, and ease of financing. Even after a decade and a half of hostile propaganda, and after no new nuclear design had been commissioned for roughly a decade, nuclear was still coming in in the mid-90s at a far better deal than offshore wind will be in the mid-2020s. Even though the latter has benefited from all this unprecedented political support, investor certainly and good will (being publicly perceived, wrongly, as the only way to solve climate change) — & consequent forced cost reduction.

In summary, rather than continue with a strategy that showed every sign of yielding a practical alternative to gas and coal, the nuclear new build programme intended by the Thatcher government was abandoned for 20 years until it became clear in 2016, that unless the current reactor fleet was at least replaced, we were gambling the risk of black-outs on storage miracles or on the success of UK shale gas.

Herein lies the *sum total* of the Tories vaunted ideological commitment to nuclear. They abandoned the technology but finally got off their arses at the last minute to do deals that were most compatible with austerity ideology, and just about covered the bases of security and supply and low carbon. (You can thank Tickell’s dad, Gove, Goldsmith, Gummer and their ilk for inserting this incongruous, pseudo-climate-concerned mentality into the Tory backbenches.)

But at the same time the Tories of course, as a whole, remain intensely relaxed about an energy future based on a mid carbon solution of gas, shale gas and wind power. (Which is also the de facto position of the SNP, because of course in respect of energy policy, for “the SNP” one can also read “the North Sea oil industry”. And that industry knows where its interests lie and what the reality of energy storage is).

But the gas caveat Tickell – strangely – doesn’t bother to complain about, or contextualize in its natural relationship to renewables – because today and for the foreseeable future *renewables need gas backup*. Surely the “environmentalist” Tickell is supposed to care about this? But actually he doesn’t, because the credibility of the anti-nuclear, 100% renewables strategy and the careers and investments which depend upon it comes first.

So in a nutshell, the achievement of “green” politics since 1988-1992 has been to force climate policy go against physics in a pursuit of paranoia, and thus to force up the cost of practical alternatives to fossil fuels, while massively capitalizing impractical ones which are still decades away from being jury-rigged together with unproven or hypothetical storage solutions. Assuming such miracles are even possible, which is simply a gamble. And we don’t have decades. In truth, this is the story across the entire developed world, and there’s no chance of matters being rectified in time to avert catastrophic climate change — but it’s important to record the state of affairs for posterity.